Osteosarcoma treatment can lead to considerable loss of bone tissue, creating a challenging microenvironment for recovery. Here, a novel biomaterial is described for tumor treatment via photothermal therapy and bone-tissue regeneration. Multifunctional composite hydrogels can be fabricated by incorporating mineralized magnetic fibers (G-mMFs) into a gelatin-genipin hydrogel. The G-mMFs exhibit notable temperature increases in response to near-infrared irradiation, and superior disruption of tumor tissue follows hyperthermia therapy in a tumor-bearing mouse model. G-mMFs protect stem cells from the oxidative stress anticipated after tumor ablation, following significant increases in catalase and anti-apoptotic gene expression. G-mMFs demonstrate enhanced osteoinductivity, with nearly 90% of human adipose-derived stem cells exhibiting osteogenic markers. Adenosine signaling-mediated osteogenesis and restoration of osteogenesis under oxidative stress can be demonstrated through stem-cell differentiation in the presence of H2O2. In vivo, regeneration of bone tissue can be assessed using a calvarial bone-defect mouse model, with nearly twice the amount of bone formation in the G-mMF group compared with mice without implantation, along with a more mature bone-tissue structure. Collectively, these study results present G-mMFs as a multifunctional biomaterial that simultaneously addresses tumor ablation and bone regeneration, offering a promising strategy for the comprehensive treatment of osteosarcoma.